NorAm Drilling (NORAM) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was $25.8 million, down from $26.6 million in Q4 2024, with 89.7% rig utilization and 10 of 11 rigs employed.

• Adjusted EBITDA reached $6.7 million, up from $6.6 million in Q4 2024, driven by lower operating expenses.

• Net profit after tax rose sharply to $5.2 million from $1.9 million in the previous quarter, aided by a change in depreciation policy.

• Paid $5.2 million in dividends during Q1, with 30 consecutive monthly distributions and two additional monthly dividends declared post quarter-end.

• Backlog stood at $17.6 million as of May 28, with nine rigs under contract and two seeking opportunities.

Financial highlights

• Revenue for Q1 2025 was $25.8 million, down from $26.6 million in Q4 2024, mainly due to lower utilization.

• Adjusted EBITDA was $6.7 million, up slightly from $6.6 million in Q4 2024.

• Operating profit rose to $5.2 million in Q1 2025 from $1.6 million in Q4 2024, driven by lower expenses and revised depreciation.

• Net profit for Q1 2025 was $5.2 million, a significant increase from $19,000 in Q4.

• Net cash flow from operations reached $9.5 million, up from $6.1 million year-over-year.

Outlook and guidance

• Near-term outlook weakened by E&P capex reductions, slowing US oil production growth, and continued pressure on rig count and day rates if WTI prices remain low.

• Nine rigs are contracted, with one transitioning between customers and two seeking opportunities, including outside the Permian.

• Dividend policy remains to return all excess cash flow to shareholders, subject to profitability and minimum liquidity.